By JOHN COOK, P-I REPORTER

Published 10:00 pm, Wednesday, August 1, 2007

Seattle-based Getty Images is cutting about 100 employees and its chief executive, Jonathan Klein, is moving to New York temporarily to be closer to customers and partners.

The news comes as Getty's second-quarter earnings missed targets and it reduced its financial projections for the year.

Hardest hit in the layoff were senior-level directors and executives in Seattle, accounting for about 25 percent of the cuts. Along with Klein, some of the marketing functions -- including public relations -- will be moved to New York. A new senior vice president of marketing, whom Getty is in the process of recruiting, also will be based in New York.

"As we enter into other areas of digital media, it is sensible for us to have a more senior presence there," said Klein, adding that it also will be easier to meet with European customers.

What does that mean for the Seattle headquarters?

Deb Trevino, vice president of corporate communications, who plans to leave the company, said the headquarters will remain in Seattle and that Klein plans to return after nine to 12 months.

Getty Images employs about 2,000 people worldwide, including 400 or so in Seattle.

Despite the cuts, Klein anticipates that Getty Images will finish the year with about the same number of employees as the beginning of the year. That's because the cash-heavy company -- it finished the quarter with a cash balance of $288.6 million -- has continued to gobble up emerging startups, including three in the second quarter alone.

The 5 percent reduction in the work force -- the second layoff in the past nine months -- is expected to result in annualized savings of $20 million.

Although revenue grew 6.5 percent to a record of $218 million and net income finished at $33.7 million, Klein said he was "far from pleased" with the results.

That's because the company's traditional creative still-imagery business has slowed substantially, and the outlook is not good for the rest of the year. Getty, which missed its second-quarter earnings targets by 2 cents, reduced its overall revenue projection to $855 million for 2007.

Layoffs have become somewhat commonplace in the digital-image sector, with Seattle's Corbis chopping about 160 employees last month. Getty Images, meanwhile, cut an undisclosed number of employees late last year.

Klein said the traditional image business is "tough for us all," but he pledged to "reinvigorate" that business unit. He said the recovery would not occur this year, citing an especially slow market for print brochures and print advertising.

"Stabilizing our traditional creative stills business is our No. 1 priority," Klein said, adding that shifting advertising dollars to the Web is having an effect on that segment of the business. That's because -- at this time -- Getty Images does not have the ability to license photos within text-based advertisements that are served by Internet search engines.

Meanwhile, Getty continues to invest in new initiatives around music licensing, consumer Web services and other areas.

Klein also said the company is looking at "bold ways" to capture those customers who want images just for the Web, rather than for a print publication. It plans to start a new initiative around that effort this summer. It also is pushing hard into multimedia, with Getty's photographers to start covering news and entertainment events with video cameras and digital audio devices.

"Our customers need multimedia product," Klein said. "Often, they don't have the time, the content, the expertise or the resources to create it themselves, and that's exactly where we come in."

In the conference call with analysts, Klein played down a question about whether Getty Images would consider going private. He said the company -- traded on the New York Stock Exchange -- has been public for 11 years and intends to stay that way.

"We have some good quarters, we have some great quarters and we have some quarters that we are not particularly pleased with," he said. "I am confident that we are doing the right things, we are taking the right hard decisions, we have our priorities right, but we do have some issues to deal with, some of which that are not of our own making and are somewhat out of our control."